Financial Transparency Coalition

Thanks to an AP report that came out yesterday, we now know of yet another reason shell companies are used to keep information in the shadows, but this one involves a U.S. government agency and a “Cuban Twitter”.

From the AP report:

The project, which lasted more than two years and drew tens of thousands of subscribers, sought to evade Cuba’s stranglehold on the Internet with a primitive social media platform. First, the network would build a Cuban audience, mostly young people; then, the plan was to push them toward dissent.

The U.S. Agency for International Development (USAID) created the messaging service, “ZunZuneo,” with the explicit purpose of making it look like a legitimate business, rather than an entity set up by the U.S. government. To do this, the agency, predictably, looked towards a time-honored secrecy tactic of the world of international business: anonymous companies.

According to the AP:

USAID and its contractors went to extensive lengths to conceal Washington’s ties to the project, according to interviews and documents obtained by the AP. They set up front companies in Spain and the Cayman Islands to hide the money trail . . .

“There will be absolutely no mention of United States government involvement,” according to a 2010 memo from Mobile Accord Inc., one of the project’s creators. “This is absolutely crucial for the long-term success of the service and to ensure the success of the Mission.”

The report details the structure further, claiming that a corporation was set up in Spain, and an operating company was based in the Cayman Islands, a British territory well-known for being a tax haven, so the “money trail will not trace back to America.”

While the AP report questions the legality of the agency’s actions, there is a different aspect of the revelation that is perhaps more unnerving. Using shell companies to hide the true owner’s identity is a secrecy method at the disposal of anyone with an Internet connection and a credit card to pay processing fees. It’s not just reserved for secret government programs.

Creating anonymous companies has been at the forefront of the methods used for money laundering, government embezzlement, and corporate tax evasion, which are some of the biggest contributors to illicit financial flows.

But, without publicly accessible registers of beneficial ownership information —information on the person(s) that ultimately own or control a company — traffickers, crooks, and corrupt politicians will continue to hide in the shadows, and keep their names as far away from their bank accounts as possible.